Conventional oil and gas investing and long term supply
Oct 22nd, 19
The long term benefits of investing in conventional drilling exploration projects, seems pretty clear. It's a bit like the Hair and the Tortoise story, Conventional drilling being the steady pace that will cross the finish line and keep going. Unconventional drilling projects make great investments.. for SOME. It all depends where you are on the investor chain. If your investment dollars pay off AFTER the bulk of the oil has been recovered, do the math. On the bright side, you will have some great tax breaks regardless of which method you invest in!
"an unconventional oil well might experience a 60-percent depletion rate in its first year of production. In contrast, the depletion rate for a conventional well during the same period might be just 12 percent." rigzone.com
Conventional drilling projects may well still be paying out to investors after they die, It is not unusual for family trusts to invest in oil and gas exploration projects ensuring the long-term financial stability continues to benefit generations to come. The bottom line is, without conventional oil and gas projects the long-term outlook is a decline in crude oil and natural gas production. These conventional methods targeting the big reserves that last longer are still an important player in the energy industry...Shale projects can't compete on longevity.
“You get all those volumes up front with your investment whereas a conventional well’s production will plateau for, say, 20 years or more,” he continued. “Some conventional wells will produce for 100 years.” rigzone.com
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The GOP Tax Bill Is A Big Win For U.S. Oil And Gas
Oct 21st, 19
So two years later (nearing December 2019) insider investors by the thousands have received their ( “likened to rebates -- ??”) returns in the form of tax savings when they directly participated in an oil or gas well in the United States.
Additional benefits from joining in the growth to become the largest producing oil field in the world, the Permian Basin, gave up net after tax returns averaging over 60% by taking advantage of the entitlements, same as big oil, and equal for “Joe Smith”, an accredited investor, in to stand shoulder to shoulder with any industry operator --- why?
– because in the USA Joe is investing the only country in the world where mineral estates are not owned and controlled by Government. Accredited entities can directly participate in the oil rush in America. The government provides incentive to invest, and it treats any one man or woman investor with the same
tax structure of investment and tax shelter as the “big oil company”, and it keeps upping the incentive ante. Result: the US is no longer dependent on foreign imports of oil, and is now a net exporter of the highly prized crude.
And as a kicker, there is a code in the IRS manual, providing 15% of earnings TAX Free income. Where else do you see IRS and TAX FREE INCOME in the same context ??
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Big isn't always better in Oil & Gas Investment
Oct 21st, 19
An interesting article on Oilprice.com by Alex Kimani discussing current investment news and projects and whether investing in the big name companies, aka 'Supergiants' like Exxon and Chevron V the smaller Independents is a sound move. It would seem the preference is for new investing within smaller companies where investors have more leverage on which projects, or prospects they want to invest in.
Not all companies have turned to Shale drilling and still have projects that utilize traditional vertical drilling methods. It's a tough economy, but the Indies, including ourselves are still exploring and drilling new projects and I don't see that stopping anytime soon. There are still undiscovered reserves of Crude Oil & Natural Gas for those willing to put the time and energy in, and the long term pay outs of traditional drilling methods are worth the effort.
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U.S. Oil Jobs under pressure
Oct 19th, 19
Nothing is ever black and white, earlier this week I read an article about the lack of legal workers making it hard for oil companies to find adequate labor and they were having to leave equiipment sitting idle. Many are forced to hire undocumented workers willing to do jobs others won't and face fines and even jail time.
...On the flip side of the coin, now we have a great article by Irina Slav about companies laying people off to appease shareholders and meet promised return goals. Oil prices are stagnant, rig counts are up...and down... depending on which report you read.
Production is up, exports are up, new pipelines are flowing, banks are investing, companies are employing new technologies and methods.... so what is the problem? More efficient drilling methods, new technology, uncompleted wells, oil and gas prices? A 5% decline doesn't seem drastic, unless you are one of the 5% who find themselves unemployed.
Production certainly doesn't appear to be slowing down and is expected to continue rising in the Permian Basin for the foreseeable future.
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